The current situation in the Chinese seamless pipe market is very tense as the government has forced many steel mills to stop or reduce production by limiting electricity supply. Over the past two weeks, domestic quotations of seamless pipes have increased by a maximum of RMB 200/mt ($30/mt), while export prices have gone up by $30-50/mt. The suspension of production by steel mills due to power cuts will heavily impact domestic steel supply in the short term. The decreases in September outputs will prevent the volume of seamless pipes available in the domestic market from rising too high. At the same time, pipe makers, under pressure from rising raw material costs, will certainly raise their prices to avoid possible losses. Current round billet prices in China are at around RMB 4,650-4,700/mt ($685-690/mt) ex-works with 17 percent VAT.
Chinese domestic prices of seamless pipes, 2"-8" grade B according to ASTM A106 or GB/8163, are varying at around RMB 5,500-6,000/mt ($810-885/mt) ex-works, including 17 percent VAT.
Current export offers of seamless pipes from Chinese manufacturers for 2"-6" grade B material according to ASTM A106/API 5L are on average at $890-980/mt FOB, while 16"-20" pipes are at $950-1,120/mt FOB.
Export offers of galvanized seamless pipes, 2"-8" grade B according to ASTM A106/A53 from Henan Province are being given at $1,050-1,090/mt FOB.
Export quotations for 2 3/8"-4" tubing J55 as per API 5CT, plain ends, are in the range of $1,080-1,150/mt FOB, while quotations for 4 ½"-7" casing are at $1,030-1,100/mt FOB.
According to the China Iron and Steel Association (CISA), China exported 366,262 mt of seamless pipes in July, indicating a decrease of 6.8 percent from the June level but up 35.4 percent year on year. Exports of seamless pipes from China for the first seven months of this year reached 2.1297 million mt, up 15.9 percent on the corresponding period of last year. Market sources report that exports of seamless pipes from China have declined mainly due to trade barriers against Chinese material in many countries. Market players are also worried that the increasing risk of a European debt crisis could hurt oil demand and lead to less drilling activity, which would not support exports of OCTG from China.